Mindful Insights - AHP Program Modeling
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Analytic Hierarchy Processing is a method to simplify decision making. If you have many options and many needs, selecting the correct option can be very difficult. If you break it down into a series of small decisions, it is often much simpler. AHP is generally considered to be statistically accurate. Its primary value is, however, to create an ordered list of options based on a complex set of criteria. So if you have 20 projects to complete and you want to know which ones to do first, you can use AHP. If you have a dozen vendors and you want to know which ones to interview, you can use AHP. For anything with complex criteria and many options, use AHP.
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Mindful Insights - AHP Program Modeling
- 2. AHP is a method to simplify decision making. If you have many options and many needs, selecting the correct option can be very difficult. If you break it down into a series of small decisions, it is often much simpler. AHP is generally considered to be statistically accurate. Its primary value is, however, to create an ordered list of options based on a complex set of criteria. So if you have 20 projects to complete and you want to know which ones to do first, you can use AHP. If you have a dozen vendors and you want to know which ones to interview, you can use AHP. For anything with complex criteria and many options, use AHP.
- 3. You need a spreadsheet or a software tool to do the calculations for you. This is not hard, there are several available or we can supply one for you. You need a series of workshops to determine the priority of the criteria, usually called Business Drivers, and the impact of the choices you have against the criteria. This is not easy, as bringing people to consensus is complicated even if you have a simple model to work through. Finally, you need a ratifying authority to listen to your reasoning and approve the final selection.
- 4. This story is from a real project, and uses actual project notes. The client’s goal was to implement a new Digital Banking platform that would meet the needs of all the internal and external stakeholders. The problem was the number of choices and the complexity of the business drivers they had to deal with. The solution was to model the problem using AHP to determine a ranked list of vendors, based on both business goals and technology fit.
- 5. The client’s Product Executives and Program Managers met to determine their Business Drivers. These are the non-negotiable, specific, measurable outcomes that the solution has to deliver. The outcome of this session follows.
- 6. Product Fit: Payments The solution must provide extended payments functionality that can be leveraged in a digital channel. Product Fit: Mobile The solution must provide mobile apps and web from one code base, plus access to camera and NFC capabilities from the mobile device. Product Fit: Analytics The solution must accept input from, and provide information to, the corporate data warehouse solution. Product Fit: Social The solution must provide social media capabilities that can be leveraged.
- 7. Vendor Experience The vendor must understand our core market, and be able to prove they have experience. Vendor Implementation Capability The vendor must be able to deliver to our timescales, with the products versions they demonstrate. Vendor Thought Leadership The vendor must be a good partner by adding to what we have already considered.
- 8. Technology Platform The technology meet appropriate Information Technology standards and acceptance criteria. Cost of Ownership The project has to show that the investment is worthwhile in the medium and long terms. Time to Market The solution must allow us to re-home or develop new apps fast enough to meet our product roadmap goals.
- 9. Change management - pre-implementation The solution must make it easy for a customer to move off their current apps and onto this system. Change management - post-implementation The solution must make it easy to migrate all the new apps to a single, standards-based model over time.
- 10. Working with the leadership team, in our case in a group, we determined relative priority by comparing each Business Driver against each other. We asked the question: “Is Driver A more or less important than Driver B?” A 5 point scale is meaningful and easy to understand, but you can use whatever scale you need.
- 11. Payments Mobile Analytics Social Experience Implemen- tation Thought Technology Cost Time Migration - Pre Migration - Post Payments 1 Less Important Less Important Much Less Important Less Important Equal Much Less Important Equal Less Important Less Important Less Important Less Important Mobile More Important 1 Less Important Less Important Equal Less Important Much Less Important Equal Less Important Equal Equal Equal Analytics More Important More Important 1 Less Important Equal Equal Less Important Equal Less Important More Important Equal Equal Social Much More Important More Important More Important 1 More Important Equal Equal More Important More Important More Important More Important More Important Experience More Important Equal Equal Less Important 1 More Important Less Important More Important More Important More Important Equal Less Important Implementation Equal More Important Equal Equal Less Important 1 Much Less Important Equal Less Important Equal Less Important Much Less Important Thought Much More Important Much More Important More Important Equal More Important Much More Important 1 Much More Important More Important Much More Important More Important More Important Technology Equal Equal Equal Less Important Less Important Equal Much Less Important 1 Equal Equal More Important More Important Cost More Important More Important More Important Less Important Less Important More Important Less Important Equal 1 More Important Less Important Less Important Time More Important Equal Less Important Less Important Less Important Equal Much Less Important Equal Less Important 1 Equal Less Important Migration - Pre More Important Equal Equal Less Important Equal More Important Less Important Less Important More Important Equal 1 Much Less Important Migration - Post More Important Equal Equal Less Important More Important Much More Important Less Important Less Important More Important More Important Much More Important 1 Eventually we had a complete map. Completing this map as a group exercise can be time consuming, so it’s often useful to complete the map with a smaller group or even individual interviews and present it for discussion to everyone. Team dynamics will decide that for you.
- 12. This time working specifically with the program management team, as they had knowledge of each option in detail, we determined the impact each had solution had against each Business Driver. We asked the question: “Does Option A impact Business Driver B in a meaningful way?” Again, a 5 point scale is meaningful and easy to understand, but you can use whatever scale you need.
- 13. Payments Mobile Analytics Social ExperienceImplemen-tation Thought Technology Cost Time Migration - Pre Migration - Post Vendor 1 Minor Impact High Impact Minor Impact High Impact Minor Impact Moderate Impact Minor Impact Moderate Impact Virtually No Impact High Impact High Impact Moderate Impact Vendor 2 High Impact High Impact High Impact Minor Impact Minor Impact Moderate Impact Minor Impact Moderate Impact Virtually No Impact Moderate Impact High Impact Moderate Impact Vendor 3 High Impact Minor Impact Moderate Impact Minor Impact High Impact Minor Impact Virtually No Impact Virtually No Impact Minor Impact Moderate Impact Virtually No Impact Virtually No Impact Vendor 4 Moderate Impact High Impact Minor Impact Minor Impact Minor Impact Very Significant Impact High Impact Very Significant Impact High Impact High Impact High Impact Very Significant Impact Vendor 5 Virtually No Impact High Impact Virtually No Impact Virtually No Impact Very Significant Impact High Impact Moderate Impact High Impact Moderate Impact Very Significant Impact Moderate Impact High Impact Eventually we had an Impact Assessment map for all vendors mapped against each criteria. The most important concept to remember is the AHP process is forcing these conversations to happen around 2 simple to understand and agree concepts: 1) Which are the most important Business Drivers? and 2) Which projects have the most impact?
- 14. Score Rank Gap Vendor 1 17.26 4 35% Vendor 2 21.08 2 21% Vendor 3 14.78 5 45% Vendor 4 26.67 1 0% Vendor 5 20.21 3 24% The magic of the spreadsheet or software tool works and you have your answer. In our case, Vendor 4 clearly won the competition. But is it as simple as that?
- 15. Do you have enough people with the right skills to complete the implementation project now? Which option returns the most value for the expended outlay? What value do you expect to be returned? Which option carries the greatest risk, and can you mitigate that risk now or in the future? Are there regulatory or compliance reasons why you should pick one option over another? You will need to review your ordered list based on old-fashioned project and program management principles.
- 16. Are you selecting projects for your annual portfolio? Are you trying to choose from a large field of potential vendors? Do you have a range of implementation options for a project and don’t know which one to select? We can help you see the path ahead, cycle quicker and achieve earlier. Call us on (503) 297 5128 or email us at contact@mindfulinsights.com